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Tax policy can have an impact on spousal support

People considering divorce in Texas and across the country may be concerned about the impact of potential tax reform on spousal support and alimony. Alimony payments made to an ex-spouse following a divorce are currently tax-deductible by the payer and taxable income to the recipient.

If the law changes, the size of the awards of alimony by the courts may be lower than at present, because the amount of money coming from the paying ex-spouse's income will remain the same. However, a larger portion will go to taxes and thus a smaller portion to the ex-spouse. If the change does take place, it would automatically be considered in support orders that took place after 2017.

Child support is considered separately from alimony or spousal support and would not be impacted by potential tax changes. Spousal support is awarded when there is a major difference in earnings between the spouses. It is more likely to be awarded when a marriage has lasted for a lengthy period and can be long-term or temporary, awarded for a period of time to allow the lower-earning recipients to advance their earning potential.

Nearly 600,000 taxpayers in the United States claim the alimony deduction as part of their annual tax filing. The recipient pays taxes on their support as income. However, because the recipient is usually in a lower tax bracket, the dollar amount of taxes received is less than the deductions taken.

Spousal support agreements and orders are made at the time of divorce. However, circumstances can change - from federal tax policy to job loss or other personal conditions. In these cases, a spousal support modification can be pursued in order to restore balance to the legal obligation. A divorce and family law attorney can help a person struggling with changing circumstances related to spousal support to seek a modification.

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